Beyond annual budgets: Time to kick the infrastructure political football into touch

Michael Worth
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Major public sector agencies have been instrumental in driving lasting benefit through strategic procurement and broader outcomes. Think hydro dams, railways and hospitals built by the previous generation. This approach has lifted the quality and resilience of public services, the capability of a range of suppliers and also set a precedent for addressing the burgeoning issue of infrastructure technical debt.

The country faces a significant challenge with its aging infrastructure. The technical debt accumulated over the years is not just a financial burden but also a barrier to innovation and progress. We can’t make it better when we are spending all our time patching. However, the public sector’s commitment to leveraging procurement for lasting investment in capability enhancement is a beacon of hope. For example, The Innovation Fund in New Zealand was borne out of an All of Government banking tender. The fund invests in proposals that create new services and supports innovators.  Projects include improving biosecurity, cyber security, small business anti-money laundering and reducing the environmental impact by producing dairy proteins with less GHG.

New Zealand’s ambition to transition to a lower energy, renewable future further underscores the need for a robust procurement strategy. The shift towards green energy is not merely an environmental imperative but an economic one. As the world pivots to more sustainable practices, New Zealand must ensure its infrastructure is not left behind. Public procurement can be a powerful tool in this transition, fostering a market environment conducive to sustainability. Kāinga Ora’s Bader Ventura is the first passive social housing project funded with public investment in the southern hemisphere.  Not only is it a high-performance building, the project was used to showcase and openly share with the industry learnings from the design, construction and certification process. 

It’s time to plan beyond annual budgets and short political cycles

Supply markets, however, require certainty to make the necessary investments. The current system, driven by three-yearly political cycles and annual budgeting, leads to a stop-start approach that hampers project productivity. This unpredictability dissuades long-term investments and undermines the potential for innovation in the infrastructure sector.

To address this, there is a pressing need to decouple the infrastructure pipeline from the political football it has become. A more stable and predictable investment environment must be cultivated, one that transcends short-term political agendas and budgetary constraints. Some time ago we achieved this with superannuation. We need to do it again.

New Zealand stands at a crossroads. The path forward requires a concerted effort to reform public procurement, reduce infrastructure technical debt, and embrace a renewable future. By providing supply markets with the certainty they need, the country can unlock our full potential, paving the way to a more resilient, sustainable, and prosperous New Zealand. The time for change is now, and public procurement is the key to unlocking that future.